Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Tex.: Eli Lilly state law claims against pharmaceutical compounder survive dismissal on replead, (Aug 6, 2026)

By Kenneth H. Ryesky, M.B.A., J.D.

Pleadings of unfair competition were plausible within the expansive scope of the parallel statutes of seven states.

A federal district court judge in Houston, Texas has denied dismissal of Eli Lilly's amended complaint against a compounding pharmacy alleged to have improperly compounded Eli Lilly's proprietary drugs. The court found that the compounding pharmacy's products might be "new drugs" for the purposes of the Food, Drug, and Cosmetic Act, and that Eli Lilly had plausibly pleaded violations of the unfair competition laws of seven states (Eli Lilly and Co. v. Revive Rx, LLC, No. 4:23-cv-03521 (S.D. Tex. Aug. 4, 2026)).

Background. The Food, Drug, and Cosmetic Act (FDCA) mandates approval of new drugs by the Food and Drug Administration (FDA); Section 503A of the Act is a carve-out exception for drugs that are compounded for a specific individual patient with regard to the individual patient's personal medical situation [21 U.S.C. § 353a]. Many states have enacted their own Section 503A analog statutes.

Revive Rx, LLC (Revive) touts itself as "a 503A compounding pharmacy" and dispenses its products through a mail order operation.

Tirzepatide is a GLP-1 agonist class drug. Eli Lilly & Co. (Eli Lilly) is a large pharmaceutical manufacturer that manufactures proprietary tirzepatide drugs Mounjaro® and Zepbound®, the only tirzepatide drugs approved by the FDA. Eli Lilly sued Revive in federal district court, alleging abuses of the Section 353a exception by Revive in its compounding of tirzepatide drugs for patients as a predicate for violations of the unfair competition laws of Alaska, Colorado, Connecticut, Hawai’i, North Carolina, Tennessee, Texas, and Washington. Revive moved to dismiss for failure to state a claim. Previously, the court dismissed Eli Lilly's Texas law claims with prejudice, Hawai'i law claims without prejudice, and denied dismissal of the remaining claims.

Eli Lilly filed an amended complaint against Revive, in which it reprised its claims with respect to the laws of the seven remaining states. Revive moved for judgment on the pleadings.

New drugs. The court found that compounded drugs can be "new drugs" under federal and state law. The FDCA definition of "new drug" [21 U.S.C. § 321(p)] has undergone changes in text, and in case law construction, following its initial enactment in 1938; the current definition is couched in terms of "safe and effective for use under the conditions prescribed, recommended, or suggested." The relevant state parallel statutes in all of their variants do not make an exception for compounded drugs. In light of the diverse state statutes, the court declined to rule on the burden of proof regarding the what constitutes a "new drug" under the individual state statutes at this stage of litigation.

State statutes. After analyzing the applicable state statutes, the court denied Revive's respective motions for judgment on the pleadings for all of them. "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce" are broadly prohibited under Alaska's Unfair Trade Practices Act (AUTPA) [Alaska Stat. § 45.50.471(a)]. Even though Alaska law specifically permits compounding, Eli Lilly's complaint noted past safety issues in Revive's manufacturing practices. Selling unsafe products is arguably an unfair method of competition. Safety issues likewise played a part in bringing Eli Lilly's allegations into the meaning of the Tennessee Consumer Protection Act's provisions [Tenn. Code § 47-18-109(a)(1)].

Similarly, Eli Lilly's allegations were plausible under the far-reaching breadth of the Connecticut Unfair Trade Practices Act (CUTPA) [Conn. Gen. Stat. § 42-110b(a)], and under the Hawai'i unfair competition law [Haw. Rev. Stat. § 480-2(a)]. Eli Lilly's allegations under the North Carolina statute's expansive ambit similarly passed muster, and did not necessarily require "egregious or aggravating circumstances" as Revive had insisted. Also broadly construed is the Washington State statute [Wash. Rev. Code §19.86.020], which "may be predicated on a per se violation of a statute or an unfair act or practice not regulated by statute but in violation of public interest."

The court declined to grant Revive's motion regarding Colorado law because "the specific requirements of Colorado's pharmacy law and how it distinguishes between compounding and manufacturing" were not adequately briefed.

The Case is No. 4:23-cv-03521.

Judge: Rosenthal, L.

Attorneys: David Ian Horowitz (Kirkland & Ellis LLP) for Eli Lilly and Co. Thomas E. Hogan (Baker & Hostetler LLP) for Revive Rx, LLC.

Companies: Eli Lilly and Co.; Revive Rx, LLC

Cases: Advertising StateUnfairTradePractices TexasNews